As we’ve mentioned previously on the blog, divorce is a major financial transaction that can have long-term ramifications for the kind of life you want to live. While legal issues like property division, alimony and child support all play a direct role in that, there are other indirect factors that can come into play. One of them is your credit score.
Does divorce negatively affect your credit score?
Divorce alone typically doesn’t impact your credit score. However, the circumstances of your marriage dissolution can certainly lead to a decreased credit score that, in turn, impacts your finances. Here are some ways your credit score could take a hit in the aftermath of divorce:
- Your and your spouse’s names remain on jointly held debt and your spouse fails to make good on a promise to pay their portion of the debt.
- Debt that’s acquired through the property division process becomes unmanageable, leading you to make late payments, especially in light of decreased household income.
- Your credit balances increase as you take on more debt that’s challenging to quickly pay off.
- You refinance major loans like a mortgage, which can knock points off your credit score.
- Poor communication with your spouse can lead to missed payments that then negatively impact your credit score.
To avoid a credit score hit, then, you have to be intentional about how you communicate with your spouse, divide financial obligations and reorganize debt. This can be a complicated, unsavory process, but it’s one that’s necessary to protect your future.
Know how to protect your interests as you navigate divorce
There are several seemingly tangential issues in the marriage dissolution process that can end up serving a significant impact to your post-divorce life. That’s why you have to enter the process fully prepared. If you want to protect your interests as much as possible in divorce, then, now is the time to start thinking through the steps you need to take to ensure you understand how the process has to play out to protect your future.